Things do not become more desirable just because we have chosen them before: The "mere choice effect", an economic psychology classic, fails under scrutiny

Does choice change preferences? An incentivized test of the mere choice effect. Carlos Alós-Ferrer & Georg D. Granic. Experimental Economics, Aug 15 2021. https://link.springer.com/article/10.1007/s10683-021-09728-5

Abstract: Widespread evidence from psychology and neuroscience documents that previous choices unconditionally increase the later desirability of chosen objects, even if those choices were uninformative. This is problematic for economists who use choice data to estimate latent preferences, demand functions, and social welfare. The evidence on this mere choice effect, however, exhibits serious shortcomings which prevent evaluating its possible relevance for economics. In this paper, we present a novel, parsimonious experimental design to test for the economic validity of the mere choice effect addressing these shortcomings. Our design uses well-defined, monetary lotteries, all decisions are incentivized, and we effectively randomize participants’ initial choices without relying on deception. Results from a large, pre-registered online experiment find no support for the mere choice effect. Our results challenge conventional wisdom outside economics. The mere choice effect does not seem to be a concern for economics, at least in the domain of decision making under risk.

Conclusion

Using a novel, parsimonious experimental design, we have presented the first conclusive evidence on the economic validity of the mere-choice-induced preference change phenomenon. We do not find any evidence which could be interpreted as mere-choice-induced preference change. Of course, absence of evidence is not evidence of absence, but, given the power analysis underlying our analysis, the simplest explanation for our results at this point is that mere-choice-induced preference change in economic domains does not exist or is of a negligible magnitude.

From predicting consumer behavior to cost-benefit analyses of medical treatments to welfare comparisons of alternative market institutions, many applications of standard theories of decision making under risk are built on the possibility to organize observed choices through underlying stable preferences. We have shown that the latter view seems appropriate with regard to mere-choice-induced preference changes.

Of course, as with any other experiment finding a null effect, it might still be the case that the alleged effect exists under some additional condition not fulfilled in our design. For instance, we have manipulated choice in lottery pairs by previous choices involving the riskier of the two lotteries in the pair, in the sense that the two monetary outcomes of that lottery are slightly more extreme than the ones of the alternative. However, as the mere-choice effect is understood in the literature, it should have been effective in our experiment, and additional conditions would come on top of received descriptions of the alleged effect.

We should also remark that we have studied the pure effect of uninformative choice on preference. A related stream of literature in psychology, which regrettably used a flawed design (see Alós-Ferrer and Shi, 2015, for details), can be seen as incorporating some form of tradeoff in choice. If tradeoffs are a necessary precondition for the phenomenon to emerge then appropriate experimental designs will have to be developed, with an eye on separating this potential source from the pure effect of choice. At this point, however, we can conclude that the phenomenon of mere-choice-induced preference change is weak or nonexistent and, therefore, probably not very relevant in economically-relevant domains.